Ian Pearson MP

ACCELERATE AWARDS EVENT

Rachel did ask if I would abseil onto the platform in keeping with the Bond theme, but as this is an automotive evening I suggested some small modifications to my Ministerial car instead. I look forward to trying out the rocket boosters on my way home.

From coverage of the auto industry over the last few months, you would think that the industry in West Midlands had been reduced to a handful of survivors and any gathering would be more like a wake than this evening’s celebration. So I hope the national press are here tonight, when we hear later about the many achievements among automotive suppliers this year, driven by people in this room.

Bad news sells, so we shouldn’t be surprised that the MG Rover story so dominated the headlines. There’s no doubt it was bad news, both for the industry and for the whole region. For many of those who lost their jobs so suddenly on that Friday in April, it has been a desperately tough six months. As we enjoy the good food and good company tonight we should take the time to remember those who worked at MG Rover, at Powertrain and in the supply chain and who are still without work today. Helping them and their families to pull through has to be a top priority, and I know that Nick Paul and his Rover Task Force colleagues are making sure they are not forgotten and the right support continues to be in place.

But while the impact on individuals has been severe, the impact on the economy as a whole has been significantly less than many people were predicting. In particular, the supply chain showed more resilience and flexibility following MG Rover’s collapse than even the most optimistic projections.

First and foremost, this is a tribute to all of you – to the way in which you have worked to become more efficient, to introduce new products and to find new customers and new markets. Many of you will have taken advantage of the initiatives offered by the Accelerate programme to make these changes, so the Accelerate team deserve their share of the credit too. And of course the Rover Task Force, under the chairmanship of Nick Paul, has done an excellent job of drawing together help for companies, for individuals and for the community. This was recognised at the highest level when Nick was invited to 10 Downing Street with other task Force members to brief the Prime Minister.

Turning to the future, I believe that the prophets of doom will be proved wrong again. Let me take a moment to explain why I believe that the automotive industry has a good future in the UK and the West Midlands in particular.

Perhaps the most important single fact about the automotive industry is that it is a global industry, perhaps the global industry. Although few of the leading firms are UK owned we are fortunate to have many of the most powerful and successful automotive businesses in the world here in the UK. They are not here on a whim – they are here because they see the UK and the West Midlands in particular as a good place to do business.

Public speakers are well advised to avoid statistics if they want their audience to stay awake but I will risk a few to reinforce the point that the UK continues to have a major automotive sector.

Eight major car manufacturers and nineteen of the world’s top twenty components suppliers have factories in the UK.

Despite the closure of MG Rover the UK is expected to produce nearly 1.6 million cars and over 200,000 commercial vehicles in 2005. As minister for Trade I take particular pleasure in noting that over two-thirds of the cars produced in the UK are exported.

No one would deny that this has been a difficult year but this does not sound like an industry on its last legs.

More than 25% of this industry is here in the West Midlands, contributing over two billion pounds of value-added and 60,000 jobs to the regional economy. The region continues to be the heart of the automotive industry in the UK, with a range of companies and supporting institutions that are not found anywhere else in the country.

The presence of so many firms in the region, from major vehicle manufacturers and specialist design houses to niche manufacturers and flexible component suppliers is a major source of strength. This cluster of specialist skills is reinforced by the SMMT Industry Forum and the Automotive Academy, by the technology and training available from universities and colleges, and by business support organisations such as Accelerate and the Manufacturing Advisory Service.

Together, this unique array of talent is a major factor attracting firms here and driving productivity and innovation. The closer relationships, better information and powerful incentives that it provides are immensely hard to replicate. The more complex and dynamic the world economy becomes, the greater the potential advantage this combination of skills offers to the region.

In talking about the strengths of the region I would particularly like to highlight the number of niche manufacturers. Firms such as Aston Martin, Morgan, Westfield, Gibbs and, most recently, Marcos offer designs calculated to appeal to those who want something different. In the case of Aston Martin, something very different indeed by the time ‘Q’ has added the optional extras.
As customers become more demanding and look for greater individuality in their vehicles, firms such as these look to have a bright future – and the more there are, the more the region’s supply base and skills base are reinforced.
So the position is not as bleak as it is sometimes painted by the doom-mongers. Clearly, the automotive industry remains fiercely competitive. As car and component makers in newly industrialised countries join the fray, this competition will become even more intense.

We cannot hope to compete by putting up barriers – we are a trading nation, and while trade barriers may save some jobs in the short term, within a few years they would do untold damage to our competitiveness, our global industries and to employment. Nor is there any mileage in seeking to compete on the basis of relatively low costs within Europe, although these certainly help. But the UK will never be a truly low-cost location, nor should this be our objective.

The only way forward for advanced economies like ours is to ensure that we can offer customers round the world something unique – better designed, cleaner, cleverer products that ever more demanding customers around the world want to buy. No one would deny that this is a challenging task but it is one which I am confident that that the automotive industry in the West Midlands and around the UK is well able to tackle.

The key to understanding any industry is to understand what the customers want. Customers want a lot of things from their new cars – they have to look good, they have to be comfortable, safe, economical and available with a short lead time. As environmental concerns grow, we also want a vehicle that has minimal environmental impact during manufacture, in use and at the end of its life. And, of course, we want it to be cheap.

Innovative design is an important part of this. The new Jaguar XK made here in the West Midlands is a good example and I am delighted at the reception that it has received. The marque's new styling direction, as so beautifully showcased on the XK, bodes well for the future. But the highly advanced aluminium structure technology ensures that the XK is not just a pretty face. It makes for a lighter, more efficient, more recyclable car - and that means a lower environmental impact.

Equally important is innovation in the way things are done – be it the manufacturing process, quality systems, customer relationships, purchasing or new product introduction. All of the areas, if fact, where tonight’s award nominees have been working with help from Accelerate.

And the interdependence of the supply chain means that companies cannot do this alone but must work together to eliminate waste and improve efficiency. I know that many of you have worked hard to improve those relationships – often helped by Accelerate or the DTI’s national Supply Chain Group programme. It is essential that these efforts continue and I know that they will.

For innovative ideas to succeed they need to be underpinned by a high level of skills throughout the supply chain. Although the best British companies can match the competition, this has been an area where the UK has lagged behind our rivals. But with the Automotive Academy now up and running – supported by £15m from DTI and based here in the West Midlands – I am confident that we have made a good start in building for the future.

The final priority must be a willingness to look outwards. The automotive industry in the West Midlands has many strengths, but there is always something to learn from other sectors and other regions. Looking outwards might mean using your capability to win work from other industries, or it might mean adopting techniques from another sector, in the same way that aerospace has taken on so much best practice – and so many good people – from automotive. It might mean looking abroad to establish partnerships in newly industrialising countries, so as to offer a winning combination of high skills and low costs. Or it might mean finding a partner here in the UK, to create a joint capability that your customers demand. One thing is certain: if you do not take advantage of the opportunities on offer then your competitors – here and abroad – will.

Government – both central government and public bodies here in the West Midlands – is committed to supporting you as you work to improve your businesses. Since it was set up in 1996, Accelerate and its partners have assisted 1,700 companies to improve their productivity, work more closely with their supply chains and introduce new products and processes. I am pleased that a further £7.5m funding was agreed earlier this year to enable the programme to continue working with you to face the challenges of the future.

Putting that money to best use has to be led by the industry. I know that your new Chairman Malcolm Bird – or ‘M’ as he is more commonly known – will lead the debate with his usual vigour and honesty. And I would ask all of you, whether you are talking to the Accelerate team, to Advantage West Midlands or the DTI – please be just as honest and vigorous. All I have said about innovation and new ways of working applies just as much to the public sector as it does to automotive. If we need to change the way we work with you, please challenge us to do just that.

For the rest of the evening, though, we should take stock of what has been achieved and celebrate the success of tonight’s nominees. All of them have a good story to tell and all of them are winners already, in the sense that they have won their customer’s respect and, we hope, future business. In their shoes I would be a little worried about what they might be expected to do later this evening - the invoice for parachute hire that Rachel hid under her plate as I arrived is one clue, but what about the scuba diving gear hidden under our table? Who knows.

The nominees are rightly proud of what they have achieved. With the commitment and energy of Malcolm, his industry colleagues and the Accelerate team I am sure that they will get the support to continue their progress and act as role models for new companies joining the programme. The rest of this evening belongs to them.